Is PagerDuty, Inc. (NYSE:PD) Potentially Undervalued?

PagerDuty, Inc. (NYSE:PD), might not be a large cap stock, but it saw significant share price movement during recent months on the NYSE, rising to highs of US$22.93 and falling to the lows of US$17.95. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether PagerDuty's current trading price of US$18.40 reflective of the actual value of the small-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at PagerDuty’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for PagerDuty

Is PagerDuty Still Cheap?

Great news for investors – PagerDuty is still trading at a fairly cheap price. According to our valuation, the intrinsic value for the stock is $27.79, but it is currently trading at US$18.40 on the share market, meaning that there is still an opportunity to buy now. Although, there may be another chance to buy again in the future. This is because PagerDuty’s beta (a measure of share price volatility) is high, meaning its price movements will be exaggerated relative to the rest of the market. If the market is bearish, the company's shares will likely fall by more than the rest of the market, providing a prime buying opportunity.

What kind of growth will PagerDuty generate?

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. PagerDuty's earnings over the next few years are expected to increase by 27%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? Since PD is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. With a positive outlook on the horizon, it seems like this growth has not yet been fully factored into the share price. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on PD for a while, now might be the time to enter the stock. Its prosperous future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy PD. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

So while earnings quality is important, it's equally important to consider the risks facing PagerDuty at this point in time. Case in point: We've spotted 2 warning signs for PagerDuty you should be aware of.

If you are no longer interested in PagerDuty, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.